# kaal:claim:3405660-002

**Claim.** Moral hazard in hedge fund lending persists even when the lender is fully informed, because high enforcement costs can make prevention too costly for the lender.

**Type.** mechanism  **Support.** argued

**Holds when.**

- lender to hedge fund relationship
- enforcement costs are high relative to expected loss

**Source quote.**

> Moral hazard can also occur because high enforcement costs might make it too costly for the lenders to hedge funds to prevent moral hazard even when the lender is fully informed about the hedge fund's activities.

**From.** Kaal, *Indirect Regulation of Hedge Funds* (2019), I. Introduction, page 4

**Cite as.** Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660

**Verify.** sha256 of source PDF `cf507b1833071765bc13a5605f38c2591582eca85f40869e38b6ff075c04d29d` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kaal%20-%202019%20-%20Indirect%20Regulation%20of%20Hedge%20Funds.pdf

**Topics.** risk-and-incentives, compliance, private-funds, defi

**Keywords.** moral-hazard, enforcement-costs, hedge-fund-lending, information

**Related claims.**

- extends: https://wulfkaal.github.io/claims/1806252-013

**Canonical form.** This markdown file is the canonical hashed representation of the claim. Its sha256 is the content hash used for attestation.